While the CFTC requires the reporting counterparty to report PET, confirmation, valuation and snapshot data, the HKMA requires only snapshot data to be reported along with reporting for all post trade events (e.g., novation, amendment, termination). The snapshot data is required to be reported on the next business day after the trade is executed.
The products covered in the reporting regime include rates (overnight index swaps, basis and fix-float swaps) and FX transactions (NDFs). The proposed date for complying with the new reporting regime is scheduled to be Jan. 1, 2013 and the effective date of back-loading the trades is yet to be determined.
In Japan, legislation is expected to be in place no later than November 2012 requiring all OTC derivative transactions to be reported to trade repositories. Financial instruments business operators and registered financial institutions are expected to store and report OTC derivatives transaction data to a Japanese trade repository or designated foreign trade repository. This includes all the transactions cleared by both Japanese and foreign central counterparties.
Additionally, non-standardized OTC derivative trades (e.g., exotic OTC derivative trades) that are not accepted by TRs must be reported to the Japan Financial Services Authority.
In India, per the existing regulations, banks and primary dealers have to report IRS and FRA transactions to the Clearing Corporation of India Ltd. reporting platform, while market makers are expected to report CDS trades to the centralized reporting platforms within 30 minutes of execution.
Based on the recommendations of the working group on reporting of OTC interest rate and forex derivatives1, recommendations have been made to designate the CCIL reporting platform as a singular platform to report all OTC interest rate and forex trades. All swaps and forex forward transactions between banks and their clients beyond a certain threshold ($100,000 or more) are mandated to be reported to the CCIL reporting platform. Subject to regulatory approval, CCIL may disseminate summary trade data to the public.
With regards to Korea, all OTC derivative transactions are required to be reported to government authorities under the Financial Investment Service and Capital Markets Act (FSS) and Foreign Exchange Transaction Act. Efforts are underway toward creating a new trade repository and other OTC market infrastructure in line with the global trends.
Singapore and Australia
In Singapore – relevant legislation is expected to be introduced before the end of 2012 to ensure all OTC derivative transactions are reported to trade repositories.
Likewise in Australia, legislation is expected to be introduced by end 2012 (subject to consultation with industry participants) to developing a trade repository for reporting and record keeping of all OTC derivative trades. However, the Australian Prudential Regulation Authority issued a consultation paper in June 2011 to develop central clearing infrastructure for OTC derivative transactions. It has thus far received around 22 comment letters on this proposal.
Under the current regime in China, all OTC interest rate, FX transactions can be traded on the China Foreign Exchange Trade System – a sub-institution of People’s Bank of China– and for those interest rate trades executed out of CFETS have to be reported to the CFETS reporting platform.
Further developments are underway to introduce legislation by end 2012 to determine which institution will play the role of a TR alongside formulating policies around frequency and content of OTC trade data to be reported.
Where Does That Bring Us?
Many questions remain unanswered, including final definitions of swap and swap entities such as SD/MSP. In addition, several issues around reference data requirements remain unresolved (e.g., LEI/UPI/USI, including registration requirements of LEI, final rules of reporting in many Asian jurisdictions yet to confirmed etc...).
That should not deter the reporting entities involved in dealing with OTC derivative transactions to start preparing for complying to the aggressive reporting schedule under Dodd-Frank. It is vital to overcome the known implementation challenges by gearing up to assessing the internal reporting infrastructure around:
Identifying internal data adequacy: Ability to incorporate attributes around multiple execution and clearing venues where applicable;
Timely availability of data: Ability to furnish real time reporting data across front, middle and back office functions;
Reporting venues: Overall assessment around existing messaging and reporting infrastructure including utilizing third party systems, tactical vs. strategic solution or build vs. buy decision-making framework;
Availability of reference data: Assessment around the ability to support and integrate multiple reference data identifiers including LEI/UPI/USI.
1 Reserve Bank of India - Report of the working group on reporting of OTC interest rate and forex derivatives – May 2011